And Santander’s net lending fell £6.308bn over the period, when it took £1bn from the scheme.

“The FLS is not living up to expectations,” said Citi economist Michael Saunders. “The limited impact raises the likelihood of other forms of easing (such as quantitative easing) and additional credit easing.”

But not every participant cut lending. Barclays led the field with a rise of £1.898bn in the fourth quarter and £5.7bn overall from August to December, while it drew down £3bn from the Bank of England.

Some smaller lenders have seen huge increases in credit provision on the back of the FLS cash. Metro Bank hiked lending £93m, or 118.8 per cent, after taking £53m from the Bank.

The Treasury argues the support was always expected to take a few more months to fully work through banks’ pipelines and will become evident in figures for the first quarter of 2013.

Data from the British Bankers’ Association suggests almost 80 per cent of small firms’ loan requests are approved, hinting that low demand led to falling loan levels.